Self-employed people need to be careful with sick pay regulations. (Photo: © gajus/123RF.com)
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Self-employed people often overestimate their sick pay benefits. But this coverage isn't pointless. Those who know the pitfalls can avoid false expectations.
"Why give double the joy," jokes the Rhinelander, "once when a promise is made and once when it's kept?" The fun stops at the very latest when promises in business aren't kept. But sometimes it's also due to false expectations. One example of a supposedly broken promise is the sick pay regulation (KG), which primarily affects the self-employed. This lulls them into a false sense of security.
Heribert Müller (Name changed by the editors). His craft business was badly ripped off by a major customer. The company nearly slipped into bankruptcy. The following year, owner Müller collapsed under the psychological stress. He was diagnosed with burnout. However, the insurance company denied him the co-insured KG. The reason: the previous year's loss.
What is it all about? Sick pay covers the financial loss during a prolonged period of incapacity to work due to illness. It is a wage replacement benefit under Section 32b Paragraph 1 of the Income Tax Act. The key issue is the so-called "prohibition of unjust enrichment." This protects the insurance fund from abuse and stipulates that no one may be better off with sick pay than under healthy conditions.
If there was no profit but a loss in the relevant period before the illness, there is no KG. Very few people are aware of this. KG is capped at 90 percent of net income. For self-employed individuals, the net profit (revenue minus expenses and taxes) of the previous twelve months is used.
What KG is in statutory health insurance, Sickness Allowance (KTG) is in private health insurance. Privately insured individuals can theoretically freely negotiate the amount of their KTG with their insurer. This also applies to those with statutory insurance who make private provisions for long-term incapacity to work or privately top up their statutory KG entitlement. But be careful: When it comes to paying, the prohibition of unjust enrichment, i.e., the upper limit on net profit, applies here as well.
Private insurers base their calculations on the same assessment period, usually twelve months before the onset of the illness. Any KG payments must be credited to the KTG. "It is therefore not sensible to insure daily sickness benefits that significantly exceed net income," advises the Association of Private Health Insurance (PKV). Contractual freedom only applies below the upper limit. Therefore, anyone with sufficient financial flexibility does not have to insure their entire net income with the KTG.
Furthermore, the receipt of KTG is not limited to 78 weeks, as is the KG provided by the health insurance fund. However, private insurers will check whether incapacity for work (AU) due to persistent illness has potentially become occupational disability (BU). This is because, once BU occurs, the entitlement to KTG ends. KTG insurance only covers "temporary loss of earnings due to incapacity for work due to illness."
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Lucky for those who then have disability insurance with an "incapacity clause." This ensures a smooth transition from incapacity to occupational disability. Otherwise, the transition period turns into a dry spell, as insurers' disability assessments can easily drag on for several months. During this time, neither KG, KTG, nor the disability pension are paid out. Almost a dozen insurers now offer such clauses. The rating agency Franke und Bornberg has compiled the details in a table, which you can find at handwerksblatt.de.
The "incapacity clause" generally applies if you have been on sick leave for at least six months, along with a doctor's certificate. In this case, the agreed disability pension is paid while the insurer is still conducting the disability assessment. Some advisors therefore see the "incapacity clause" as an alternative to the KTG.
But the rating experts don't agree: "We don't see the AU clause in BU as an alternative to daily sickness benefit insurance. The AU clause generally only pays out after six months, whereas the KTG can and should be tailored precisely to financial needs. The KTG is also often significantly higher than a BU pension."
Health insurance funds pay sick pay starting from the sixth week of illness-related incapacity to work, and for a maximum of 78 weeks for the same illness. It is primarily intended for employees and therefore continues after the end of continued salary payments by the employer. As a self-employed person with statutory health insurance, you can choose whether or not to include KG insurance. It costs an average additional contribution of 1,1 percent on top of the regular contribution rate. KG insurance is almost the only solution, especially in poor health.
Some health insurance companies also offer so-called optional plans. Age and pre-existing medical conditions are not considered here. But be careful: You are bound to the optional plan for three years. During this time, you cannot change health insurance companies. For self-employed individuals, the amount of KG is 70 percent of earned income, meaning rental income or investment income are not taken into account. The maximum paid by health insurance companies is €98,88 per day, which is 70 percent of the contribution assessment ceiling for health insurance (€4.237,50 per month in 2016). Self-employed individuals who make a loss are no longer entitled to KG.
Self-employed individuals can secure daily sickness benefits (KTG) through private health insurance as an alternative to, or in addition to, the statutory health insurance benefit (KKG). However, good health is a prerequisite; otherwise, it can be expensive or you may not be accepted at all, depending on your age and pre-existing medical conditions. The advantage over statutory health insurance benefits: the terms are more flexible. You can choose to receive daily sickness benefits (KTG) starting from the third week, or earlier or later. This depends entirely on your financial resources.
The amount of the KTG can be freely chosen up to the amount of the net income. This can be useful if sufficient reserves are available. However, more than that is of no use. For self-employed individuals, in the event of illness, at best 80 percent, and usually 70 percent, of the average pre-tax profit over the past twelve months is paid. Any KG is taken into account in the event of a benefit.
Before signing a private daily sickness benefit contract, you should thoroughly examine it. The experts at the consumer portal Finanztip recommend the online website "versicherung-vergleiche.de." There, you can compare not only premiums but also important benefit modules. It's important, for example, that an increase in the daily sickness benefit is possible without undergoing another medical examination.
The additional module "Benefits for Partial Incapacity to Work" is also recommended if you can only return to work at half capacity after an illness. Caution: In the event of a relapse, most insurers add up the sick days. This, in turn, shortens the benefit period.
The National Association of Statutory Health Insurance Physicians and the National Association of Statutory Health Insurance Funds have simplified the application process for sick pay. Before 2016, applicants had to submit a form to the health insurance fund in addition to a doctor's certificate of incapacity for work, which the doctor had to complete beforehand. This cumbersome procedure led to delays, which in turn led to dangerous gaps in the documentation of incapacity for work. This resulted in deductions from sick pay and even loss of benefits.
Since January, this has changed. Now, only one form is required, which is available in the practices via IT.
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